Savers face a dilemma: lock down the deals now or wait, with offers tipped to ‘get even better’. Returns on the top fixed-rate savings accounts are at their highest level in years and still climbing, with some now paying up to 5.25%. It leaves those with money to put away facing a choice: lock into some of the best interest rates on offer in several years or hold your nerve in the hope they get even better?
Current Landscape
While new fixed mortgage rates have jumped in recent months—dealing a blow to many homebuyers and those aiming to remortgage—their pain has been savers’ gain. This month, the data provider Moneyfacts said fixed savings rates were at “multiyear highs,” fueled by strong competition. This trend has continued: on Thursday, the average new one-year fixed savings bond rate was 4.41%.
With a fixed-rate savings bond, you typically have to tie up your money for between six months and five years, providing a clear, guaranteed return. The one-year version tends to be popular as many people do not want to tie up cash for long periods. The top-paying accounts are offering a fair bit more than that average: at the time of writing, GB Bank had a one-year fixed-rate bond paying 5.05%. Meanwhile, Kent Reliance had a 13-month account offering 5.06% (with both requiring a minimum deposit of £1,000).
Long-Term Options
The best-buy rates are even higher if you tie up cash for longer. This week, GB Bank, Shawbrook Bank, and Vanquis were among those paying 5.25% on a five-year fixed bond. However, some savers will recall that as recently as late 2023, there were fixed bonds paying 6%. If and when the Bank of England base rate goes up, that could push returns on savings higher than they are now. Many economists predict the Bank will lift the base rate before the end of this year, with further rises thought likely next year.
